European stocks rise after upbeat U.S. jobs data

Greek stocks tumble amid reports Papademos threatening to quit

LONDON (MarketWatch) — European stock markets rallied on Friday after much better-than-expected U.S. jobs data supported the view that the economic recovery remains on track.

The Stoxx Europe 600 index (SXXP) rose 1.7% to end at 264.60. For the week, it gained 3.6%.

The U.S. Labor Department said that 243,000 jobs were added to nonfarm payrolls in January and the unemployment rate slipped to 8.3% from 8.5% in December. Economists surveyed by MarketWatch expected a payrolls increase of 121,000 and an unchanged jobless rate. Read more on jobs report.

Europe's week ahead: ECB, Bank of England meetings

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The European Central Bank is likely to keep monetary policy on hold next week, while the Bank of England may decide to expand its asset-purchase program in an effort to revive the British economy.

Markets were also supported by the euro-zone composite purchasing manager's index confirming growth in private-sector activity in January. The index rose to 50.4 in January from 48.3 in December, confirming an earlier preliminary estimate. A reading above 50 indicates growth in activity.

“The crisis is not as deep as feared and that’s important for the stock market. People were getting pessimistic last year, but in hindsight it was overdone,” said Koen De Leus, strategist at KBC Securities.

Among the biggest movers Friday, shares of Temenos Group AG (TEMN) surged nearly 16% after U.K. software group Misys PLC (MSY) confirmed the two companies are in preliminary talks regarding a potential merger. Misys gained 1.2%.

Bekaert S.A. (BEKB) sank 6% as ING downgraded the stock to sell. The Belgian steel cord manufacturer said Thursday it would lay off 600 employees to reduce global production costs.

The German DAX 30 index (DAX) rose 1.7% to 6,766.67. Shares of auto maker and index heavyweight Daimler AG (DAI) rallied 3.1% after it said global sales of its Mercedes-Benz car brand rose 5.8% in January, helped by strong U.S. sales and gains in Japan. Shares of rival BMW AG (BMW) rose 2.9%.

Greek stocks under pressure

Media reports said Greek Prime Minister Lucas Papademos may resign if a new financing plan isn’t backed by the three parties that support his interim unity government. He’s expected to meet with the leaders of those parties on Saturday, as he also tries to wrap up talks with private creditors to write down debt.

Euro-zone finance ministers canceled a meeting that had been set for Monday. They were due to discuss Greece’s second bailout, and Dow Jones Newswires reported earlier that the meeting could be postponed to give negotiators and the Greek government more time to complete talks.

”If they solve the PSI (private-sector involvement) problem, they still have to implement austerity measures, so I don’t see a good outcome for Greece,” De Leus said. “I’m pretty sure this debt problem will not be solved for the next five to six years.”

The U.K.’s FTSE 100 index (UKX) jumped 1.8% to 5,901.07.

Outperforming the British index, insurance firm Admiral Group PLC (ADM) surged 7.9% after announcing an extension of its existing U.K. car insurance reinsurance partnerships into 2014.

U.K. telecommunications firm BT Group PLC (BT.A) rose 3.9% after posting a 41% jump in third-quarter profit, helped by cost cutting, lower finance expenses and new contracts. The company also said it will meet some of its earnings targets a year earlier than expected.

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